Jan. 5 (Bloomberg) -- Investors should be positioned for a rally in China stocks in the first quarter of this year, driven by favorable policy and liquidity, Goldman Sachs Group Inc. said.
“Macro growth momentum and policy variables could dictate the path of returns, which could be skewed to the first and fourth quarters and could show high volatility on tightening concerns,” Thomas Dend and Kinger Lau, analysts at the brokerage, wrote in the report.
China’s CSI 300 Index rallied 97 percent last year while the
Hang Seng China Enterprises Index, tracking so-called H shares of Chinese companies listed in Hong Kong, rose 62 percent. The results were helped by “aggressive government stimulus globally,” the analysts said. Those measures included 9.2 trillion yuan ($1.35 trillion) of new loans and a $586 billion domestic stimulus package in China.
Among the so-called BRIC nations -- Brazil, Russia, India and China -- Goldman Sachs’s chief economist, Jim O’Neill, favors Russian stocks because of lower interest rates and higher oil prices, he said yesterday in a Bloomberg Television interview.
Earnings growth will help boost Hong Kong’s H-share index to 16,800 points, and China’s CSI 300 Index to 4,300 by the end of 2010, according to Deng and Lau’s report.
Goldman Sachs is “overweight” Chinese financial, health- care, internet and media industries because they will benefit from domestic demand, the analysts wrote. Auto and mainland broker shares will also be the key themes of this year, they said
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China Stocks Set for 2010 Rally, Goldman Sachs Says (Update2) - Bloomberg.com